China’s Dairy Farmers Struggle Amid Low Milk Prices

In the rural areas of north China’s Hebei Province, local farmers have started feeding pigs something unusual: fresh cow’s milk. The farmers are not trying to make the pigs healthier. Their new diet is a result of a severe dairy industry slump across north China, where plummeting milk prices have fueled a rush among local farmers to sell milk at extremely low prices, however possible, including selling to local pig farmers. To recover their costs, some dairy farmers are feeding the milk to calves, or simply throwing out the nutritious liquid. Some have even killed their cows to prevent further losses…Full Article: Xinhua Jan 2015

Key Points

In December 2013, China’s milk prices increased to CNY 5 (~US$0.80 per kg or ~US$800 per MT) per kg, a significant price increase from CNY 3.4 CNY (~US$0.55 per kg or ~US$550 per MT) per kg that was recorded earlier in 2013. The price increase was sparked by a decline in the dairy cow population (~2 million population decline in 2013) and from farmers leaving the industry.

From late 2013 to February 2014, dairy producers in China ramped up production due to the high prices. By March 2014, the price bubble burst owing to overproduction and cheaper imports. From February to October 2014, China’s raw milk prices declined from CNY 4.26 (~US$0.68) per kg to CNY 3.84 (~US$0.61) per kg.

In 2013, the Tai’an Company (subsidiary of Inner Mongolia’s Mengniu Dairy) reportedly help instigate the culling of dairy cows in Shandong Province after it purchased raw milk at prices that were below market profitability.

ChinaAg Comment

From October to November 2013, it was reported that China’s raw milk prices increased from CNY 4,000 (US$690) per MT to 5,200 yuan (US$855) month.